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Z/Yen Group (April 2016)

Global Financial Centres Index 19 Mark Yeandle

Contents Introduction 3 ..........................................................................Main Headlines 4 .....................................................................The Overall Rankings 7 ...........................................................Most Significant Centres 12 ...................................................19 Areas of Competitiveness 13 ............................................Western Europe 15 ..................................................................Eastern Europe and Central Asia 18 .....................................Asia/Pacific 20 .........................................................................North America 22 ....................................................................Latin America and the Caribbean 24 .....................................Middle East and Africa 26 ......................................................Reputation 28..........................................................................

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Introduction

The GFCI provides profiles, ratings and rankings for financial centres, drawing on two separate sources of data – instrumental factors and responses to an online survey. The GFCI was created in 2005 and first published by Z/Yen Group in March 2007. The GFCI is updated and re-published each March and September. This is the nineteenth edition (GFCI 19). 102 financial centres are actively researched. 86 financial centres appear in GFCI 19. The remaining 16 ‘associate centres’ will join the index when they receive a sufficient number of assessments.

Instrumental factors: previous research indicates that many factors combine to make a financial centre competitive. We group these factors into five broad ‘spheres of competitiveness’: Business Environment, Financial Sector Development, Infrastructure, Human Capital and Reputational and General Factors. Evidence of a centre’s performance in these spheres is drawn from a range of external measures. For example, evidence about the telecommunications infrastructure competitiveness of a financial centre is drawn from the ICT Development Index and the Telecommunication Infrastructure Index (both supplied by the United Nations), the Networked Readiness Index (supplied by the World Economic Forum), and the Web Index (supplied by the World Wide Web Foundation). 102 instrumental factors have been used in GFCI 19. A full list of these factors is available here.

Financial centre assessments: GFCI uses responses to an ongoing online questionnaire (please participate here) completed by international financial services professionals. Respondents are asked to rate those centres with which they are familiar and to answer a number of questions relating to their perceptions of competitiveness. Responses from 3,016 financial services professionals were collected in the 24 months to December 2015. These responses provided over 57 thousand financial centre assessments of which 25,650 were used to compute GFCI 19, with older assessments discounted according to age. Full details of the methodology behind GFCI 19 is available here.

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https://www.longfinance.net/programmes/financial-centre-futures/global-financial-centres-index/instrumental-factors/

https://www.longfinance.net/programmes/financial-centre-futures/global-financial-centres-index/gfci-methodology/



Main Headlines

1. London remains just ahead of New York to retain the number one position.Both cities gained four points in the ratings and London remains eight points ahead of New York. The GFCI is on a scale of 1,000 points and a lead of eight is fairly insignificant. We continue to believe that the two centres are complimentary rather than purely competitive. A number of respondents to our questionnaire have commented that the uncertainty surrounding the possible exit of the UK from the EU is having a negative impact on London’s competitiveness at present.

2. London, New York, Singapore and Hong Kong remain the four leading global financial centres.Singapore has overtaken Hong Kong to become the third ranked centre by just two points. Tokyo, in fifth place, is 72 points behind London. The top financial centres of the world are all well developed, sophisticated and cosmopolitan cities in their own right. Successful people are attracted to successful cities and it is perhaps no surprise that these centres are ranked so high by financial services professionals.

3. Western European centres remain mired in uncertainty.The leading centres in Europe are London, Zurich, Geneva, Luxembourg and Frankfurt. Of the 29 centres in this region, 12 centres rose in the ratings and 17 centres fell. Rome, Madrid and Brussels, three centres closely associated with the Eurozone crisis have shown signs of recovery.

4. Seven of the top ten Asia/Pacific centres see a fall in their ratings.Singapore, Tokyo and Beijing rose slightly in GFCI 19. Of the top ten centres in this region, Seoul and Sydney showed the largest falls.

5. North American centres fortunes in GFCI 19 are mixed.Of the financial centres in the USA, New York, Washington DC and Los Angeles rose in the ratings. The three leading Canadian centres fell in the ratings after strong rises in the past year. Toronto remains the leading Canadian centre with Montreal in second and Vancouver in third.

6. Latin America and the Caribbean suffer.All centres in this region, with the single exception of Mexico City fall

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sharply in GFCI 19. The offshore centres in the Caribbean (in common with the British Crown Dependencies listed under Western Europe) all suffered declines along with the Brazilian centres Sao Paulo and Rio de Janeiro.

7. Centres in the Middle East and Africa also fell in GFCI 19.Having made gains in GFCI 18 all centres in this region, except Casablanca, fell in the ratings. Dubai remains the leading centre in the region, followed by Tel Aviv and Abu Dhabi. Casablanca rose 11 places and is now fourth in the region.

8. Riga and Qingdao joined the GFCI for the first time.Riga joined in 71st place and Qingdao joined in 79th place.

The historical dominance of the leading centres in Western Europe and North America has eroded over time. The mean rating of the top five centres in these regions is now lower than the mean of the top five centres in the Asia/Pacific region. The top centres in other regions, especially in Latin America and Eastern Europe, are also closing the gap:

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The performance of the top five financial centres over time is shown in Chart 2 below. London retains a slender lead over New York and Singapore is just ahead of Hong Kong for the first time:

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The Overall Rankings

The overall ranks and ratings of GFCI 19 are:

City GFCI 19 Rank

GFCI 19 Rating

GFCI 18 Rank

GFCI 18 Rating

Change in Rank

Change in Rating

London 1 800 1 796 - ▲4

New York 2 792 2 788 - ▲4

Singapore 3 755 4 750 ▲1 ▲5

Hong Kong 4 753 3 755 ▼1 ▼2

Tokyo 5 728 5 725 - ▲3

Zurich 6 714 7 715 ▲1 ▼1

Washington DC 7 712 10 711 ▲3 ▲1

San Francisco 8 711 9 712 ▲1 ▼1

Boston 9 709 12 709 ▲3 -

Toronto 10 707 8 714 ▼2 ▼7

Chicago 11 706 11 710 - ▼4

Seoul 12 705 6 724 ▼6 ▼19

Dubai 13 699 16 704 ▲3 ▼5

Luxembourg 14 698 19 700 ▲5 ▼2

Geneva 15 694 13 707 ▼2 ▼13

Shanghai 16 693 21 698 ▲5 ▼5

Sydney 17 692 15 705 ▼2 ▼13

Frankfurt 18 689 14 706 ▼4 ▼17

Shenzhen 19 688 23 694 ▲4 ▼6

Osaka 20 687 20 699 - ▼12

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Montreal 21 686 17 703 ▼4 ▼17

Vancouver 22 684 18 702 ▼4 ▼18

Beijing 23 682 29 676 ▲6 ▲6

Taipei 24 677 26 686 ▲2 ▼9

Tel Aviv 25 676 25 687 - ▼11

Abu Dhabi 26 675 28 679 ▲2 ▼4

Munich 27 672 40 661 ▲13 ▲11

Calgary 28 671 39 662 ▲11 ▲9

Los Angeles 29 670 49 650 ▲20 ▲20

Melbourne 30 669 27 685 ▼3 ▼16

Dalian 31 668 41 660 ▲10 ▲8

Paris 32 667 37 664 ▲5 ▲3

Casablanca 33 665 44 657 ▲11 ▲8

Amsterdam 34 664 36 665 ▲2 ▼1

Doha 35 652 22 695 ▼13 ▼43

Kuala Lumpur 36 649 45 656 ▲9 ▼7

Stockholm 37 648 32 671 ▼5 ▼23

Busan 38 644 24 690 ▼14 ▼46

Dublin 39 643 46 654 ▲7 ▼11

Vienna 40 642 30 674 ▼10 ▼32

Cayman Islands 41 641 34 668 ▼7 ▼27

Mumbai 42 640 59 627 ▲17 ▲13

City GFCI 19 Rank

GFCI 19 Rating

GFCI 18 Rank

GFCI 18 Rating

Change in Rank

Change in Rating

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Sao Paulo 43 639 31 672 ▼12 ▼33

Rio de Janeiro 44 637 35 666 ▼9 ▼29

Istanbul 45 636 47 653 ▲2 ▼17

British Virgin Islands 46 635 43 658 ▼3 ▼23

Bangkok 47 633 48 651 ▲1 ▼18

Warsaw 48 631 38 663 ▼10 ▼32

Copenhagen 49 630 61 625 ▲12 ▲5

Bermuda 50 629 42 659 ▼8 ▼30

Johannesburg 51 628 33 669 ▼18 ▼41

Brussels 52 627 62 624 ▲10 ▲3

Mexico City 53 626 69 616 ▲16 ▲10

Milan 54 625 65 621 ▲11 ▲4

Manila 55 624 55 631 - ▼7

Edinburgh 56 623 71 613 ▲15 ▲10

Prague 57 622 63 623 ▲6 ▼1

Jakarta 58 621 73 610 ▲15 ▲11

Glasgow 59 620 70 615 ▲11 ▲5

Helsinki 60 619 77 604 ▲17 ▲15

Gibraltar 61 618 56 630 ▼5 ▼12

Jersey 62 617 53 633 ▼9 ▼16

Rome 63 616 76 605 ▲13 ▲11

Madrid 64 615 79 597 ▲15 ▲18

City GFCI 19 Rank

GFCI 19 Rating

GFCI 18 Rank

GFCI 18 Rating

Change in Rank

Change in Rating

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Oslo 65 614 67 618 ▲2 ▼4

Guernsey 66 613 54 632 ▼12 ▼19

Moscow 67 611 78 598 ▲11 ▲13

Isle of Man 68 610 58 628 ▼10 ▼18

Bahrain 69 609 50 647 ▼19 ▼38

Riyadh 70 606 57 629 ▼13 ▼23

Riga 71 605 - - - -

Panama 72 603 52 638 ▼20 ▼35

Mauritius 73 601 64 622 ▼9 ▼21

Budapest 74 600 74 609 - ▼9

Lisbon 75 599 66 619 ▼9 ▼20

Liechtenstein 76 598 60 626 ▼16 ▼28

Almaty 77 597 51 640 ▼26 ▼43

Tallinn 78 596 82 550 ▲4 ▲46

Qingdao 79 594 - - - -

Monaco 80 590 72 612 ▼8 ▼22

Malta 81 587 68 617 ▼13 ▼30

St Petersburg 82 585 81 552 ▼1 ▲33

Cyprus 83 576 80 587 ▼3 ▼11

Bahamas 84 568 75 606 ▼9 ▼38

Reykjavik 85 562 84 537 ▼1 ▲25

Athens 86 558 83 540 ▼3 ▲18

City GFCI 19 Rank

GFCI 19 Rating

GFCI 18 Rank

GFCI 18 Rating

Change in Rank

Change in Rating

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In addition to the 86 centres, there are 16 'Associate Centres' that are researched and will be included within the main index when they have accrued a sufficient number of valid assessments in the GFCI Questionnaire:

Centre Assessments in the last 24 Months Mean

Guangzhou 162 685

New Delhi 116 553

Baku 103 502

Tianjin 100 669

Trinidad and Tobago 100 593

Buenos Aires 87 530

Sofia 85 544

Nairobi 78 501

Santiago 69 635

Wellington 68 496

Wellington 58 705

Kuwait City 51 573

Barbados 31 513

Cape Town 22 623

Hamburg 15 587

Tehran 10 400

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http://www.zyen.info/gfci/

http://www.zyen.info/gfci/



Most Significant Centres

The GFCI questionnaire asks which centres are likely to become more significant in the next few years. The centres that received the most mentions in the past 24 months are shown below:

Centre Mentions in the Past 24 Months

Shanghai 105

Singapore 89

Casablanca 76

Hong Kong 62

Dalian 46

Dubai 40

London 33

Shenzhen 30

Gibraltar 29

Beijing 27

Luxembourg 25

Almaty 13

Seoul 13

Vancouver 13

Toronto 12

New York 12

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19 Areas of Competitiveness

The instrumental factors used in the GFCI model are grouped into five key areas of competitiveness (Business Environment, Financial Sector Development, Infrastructure, Human Capital and Reputational and General Factors):

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The GFCI questionnaire asks respondents to indicate which factors for competitiveness they consider the most important at the moment. A summary of the main issues that currently concern financial services professionals is shown:

Area of Competitiveness Number of Mentions Main Issues

Business Environment 936 • Regulation is more important than ever and needs to be clear and fair.

• Corruption is even more high profile than before.

Human Capital 831 • Centres becoming more competitive in attracting skilled people.

• More awareness of a ‘brain drain’ and demographics in developing

economies.

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Taxation 796 • Tax rules must be harmonised internationally.

• Tax should be transparent and reasonable — and seen to be reasonable.

Reputation 714 • Security, safety and human rights are becoming even more important.

• Centres need to market themselves more — they are in a competitive marketplace.

Infrastructure 707 • Road transport is becoming an important issue in many centres.

• Lack of direct flights into certain centres holds them back.

Financial Sector Development

609 • More focus on the importance of the EU cluster to London.

• Physical proximity still very important.

Area of Competitiveness Number of Mentions Main Issues

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Western Europe

The financial centres in Western Europe have had mixed fortunes in GFCI 19. Of the 29 centres in the region, 18 have declined in the ratings and 11 have risen. The offshore centres have not fared well and other notable declines include Geneva, Frankfurt, Stockholm, Dublin and Vienna:

City GFCI 19 Rank

GFCI 19 Rating

GFCI 18 Rank

GFCI 18 Rating

Change in Rank

Change in Rating

London 1 800 1 796 - ▲4

Zurich 6 714 7 715 ▲1 ▼1

Luxembourg 14 698 19 700 ▲5 ▼2

Geneva 15 694 13 707 ▼2 ▼13

Frankfurt 18 689 14 706 ▼4 ▼17

Munich 27 672 40 661 ▲13 ▲11

Paris 32 667 37 664 ▲5 ▲3

Amsterdam 34 664 36 665 ▲2 ▼1

Stockholm 37 648 32 671 ▼5 ▼23

Dublin 39 643 46 654 ▲7 ▼11

Vienna 40 642 30 674 ▼10 ▼32

Copenhagen 49 630 61 625 ▲12 ▲5

Brussels 52 627 62 624 ▲10 ▲3

Milan 54 625 65 621 ▲11 ▲4

Edinburgh 56 623 71 613 ▲15 ▲10

Glasgow 59 620 70 615 ▲11 ▲5

Helsinki 60 619 77 604 ▲17 ▲15

Gibraltar 61 618 56 630 ▼5 ▼12

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The top five centres in the region, with the exception of London, have declined (PTO):

Jersey 62 617 53 633 ▼9 ▼16

Rome 63 616 76 605 ▲13 ▲11

Madrid 64 615 79 597 ▲15 ▲18

Oslo 65 614 67 618 ▲2 ▼4

Guernsey 66 613 54 632 ▼12 ▼19

Isle of Man 68 610 58 628 ▼10 ▼18

Lisbon 75 599 66 619 ▼9 ▼20

Liechtenstein 76 598 60 626 ▼16 ▼28

Monaco 80 590 72 612 ▼8 ▼22

Malta 81 587 68 617 ▼13 ▼30

Reykjavik 85 562 84 537 ▼1 ▲25

City GFCI 19 Rank

GFCI 19 Rating

GFCI 18 Rank

GFCI 18 Rating

Change in Rank

Change in Rating

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Eastern Europe and Central Asia

The two leading centres in the region suffered significant falls in the ratings whilst Moscow, Tallin and St Petersburg all saw rises in the ratings. The largest overall movement was a fall of 43 points by Almaty. Riga was a new entrant into the GFCI:

The progress of the top five centres over time is shown overleaf:

City GFCI 19 Rank

GFCI 19 Rating

GFCI 18 Rank

GFCI 18 Rating

Change in Rank

Change in Rating

Istanbul 45 636 47 653 ▲2 ▼17

Warsaw 48 631 38 663 ▼10 ▼32

Prague 57 622 63 623 ▲6 ▼1

Moscow 67 611 78 598 ▲11 ▲13

Riga 71 605 - - - -

Budapest 74 600 74 609 - ▼9

Almaty 77 597 51 640 ▼26 ▼43

Tallinn 78 596 82 550 ▲4 ▲46

St Petersburg 82 585 81 552 ▼1 ▲33

Cyprus 83 576 80 587 ▼3 ▼11

Athens 86 558 83 540 ▼3 ▲18

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Asia/Pacific

Singapore overtook Hong Kong by a marginal two points to become third in the overall index. The two Korean centres both fell having made large gains recently. In China, Shanghai and Shenzhen both fell in the ratings whilst Beijing and Dalian both rose. Qingdao was a new entrant to the index:

City GFCI 19 Rank

GFCI 19 Rating

GFCI 18 Rank

GFCI 18 Rating

Change in Rank

Change in Rating

Singapore 3 755 4 750 ▲1 ▲5

Hong Kong 4 753 3 755 ▼1 ▼2

Tokyo 5 728 5 725 - ▲3

Seoul 12 705 6 724 ▼6 ▼19

Shanghai 16 693 21 698 ▲5 ▼5

Sydney 17 692 15 705 ▼2 ▼13

Shenzhen 19 688 23 694 ▲4 ▼6

Osaka 20 687 20 699 - ▼12

Beijing 23 682 29 676 ▲6 ▲6

Taipei 24 677 26 686 ▲2 ▼9

Melbourne 30 669 27 685 ▼3 ▼16

Dalian 31 668 41 660 ▲10 ▲8

Kuala Lumpur 36 649 45 656 ▲9 ▼7

Busan 38 644 24 690 ▼14 ▼46

Mumbai 42 640 59 627 ▲17 ▲13

Bangkok 47 633 48 651 ▲1 ▼18

Manila 55 624 55 631 - ▼7

Jakarta 58 621 73 610 ▲15 ▲11

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The progress of the top five centres over time is shown below. These centres have been relatively stable for the past three years having seen significant rises in previous years:

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Qingdao 79 594 - - - -

City GFCI 19 Rank

GFCI 19 Rating

GFCI 18 Rank

GFCI 18 Rating

Change in Rank

Change in Rating

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North America

New York remains the clear leader in North America although Washington DC, San Francisco v and Boston all rose in the ranks. The leading centres in Canada fell in the ratings:

The progress over time of the five leading centres is shown overleaf. New York has increased the lead it holds over the other centres in the region:

City GFCI 19 Rank

GFCI 19 Rating

GFCI 18 Rank

GFCI 18 Rating

Change in Rank

Change in Rating

New York 2 792 2 788 - ▲4

Washington DC 7 712 10 711 ▲3 ▲1

San Francisco 8 711 9 712 ▲1 ▼1

Boston 9 709 12 709 ▲3 -

Toronto 10 707 8 714 ▼2 ▼7

Chicago 11 706 11 710 - ▼4

Montreal 21 686 17 703 ▼4 ▼17

Vancouver 22 684 18 702 ▼4 ▼18

Calgary 28 671 39 662 ▲11 ▲9

Los Angeles 29 670 49 650 ▲20 ▲20

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Latin America and the Caribbean

With the exception of Mexico City, all financial centres in Latin America and the Caribbean saw significant falls in the rating in GFCI 19:

The progress over time of the top five centres in the region is shown overleaf:

City GFCI 19 Rank

GFCI 19 Rating

GFCI 18 Rank

GFCI 18 Rating

Change in Rank

Change in Rating

Cayman Islands 41 641 34 668 ▼7 ▼27

Sao Paulo 43 639 31 672 ▼12 ▼33

Rio de Janeiro 44 637 35 666 ▼9 ▼29

British Virgin Islands 46 635 43 658 ▼3 ▼23

Bermuda 50 629 42 659 ▼8 ▼30

Mexico City 53 626 69 616 ▲16 ▲10

Panama 72 603 52 638 ▼20 ▼35

Bahamas 84 568 75 606 ▼9 ▼38

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Middle East and Africa

This region also saw some significant declines. Dubai remains the leader in the region. Casablanca is the only centre in the region to increase its rating and rank:

The progress of the top five centres in the region is shown overleaf. Riyadh and Doha have suffered significant declines:

City GFCI 19 Rank

GFCI 19 Rating

GFCI 18 Rank

GFCI 18 Rating

Change in Rank

Change in Rating

Dubai 13 699 16 704 ▲3 ▼5

Tel Aviv 25 676 25 687 - ▼11

Abu Dhabi 26 675 28 679 ▲2 ▼4

Casablanca 33 665 44 657 ▲11 ▲8

Doha 35 652 22 695 ▼13 ▼43

Johannesburg 51 628 33 669 ▼18 ▼41

Bahrain 69 609 50 647 ▼19 ▼38

Riyadh 70 606 57 629 ▼13 ▼23

Mauritius 73 601 64 622 ▼9 ▼21

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Reputation

We examine reputation by looking at the difference between the weighted average assessment given to a centre and its overall rating. The first measure reflects the average score a centre receives from financial professionals across the world, adjusted for time with more recent assessments having more weight. The second measure is the GFCI score itself, which represents the average assessment adjusted to reflect the instrumental factors.

If a centre has a higher average assessment than its GFCI 18 rating this indicates that respondents’ perceptions of a centre are more favourable than the quantitative measures alone would suggest. This may be due to strong marketing or general awareness. The 10 centres with the greatest positive difference between average assessment and the GFCI rating are:

Eight of the top ten centres by reputational advantage are Asia/Pacific centres. With the exception of Toronto, no Western European or North American centres are in the top ten. The ten centres with the greatest reputational disadvantage – an indication that respondents’ perceptions of a

Centre — Top 10 Average Assessment GFCI 19 Rating Repetitional advantage

Qingdao 689 594 95

Casablanca 750 665 85

Sydney 766 692 74

Singapore 827 755 72

Tokyo 794 728 66

Melbourne 726 669 57

Toronto 762 707 55

Dalian 723 668 55

Hong Kong 805 753 52

Taipei 729 677 52

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centre are less favourable than the quantitative measures alone would suggest are:

Centre — Bottom 10 Average Assessment GFCI 19 Rating Repetitional advantage

Helsinki 555 619 -64

Madrid 544 615 -71

Riyadh 531 606 -75

Glasgow 544 620 -76

Rome 537 616 -79

Tel Aviv 589 676 -87

St Petersburg 487 585 -98

Reykjavik 462 562 -100

Moscow 510 611 -101

Athens 454 558 -104

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